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Starcom MediaVest bets $20 million on addressable ads in 2011

Will 2011 be the year addressable television advertising – commercials targeted to specific homes – finally takes off? The answer is yes if you ask DirecTV and Starcom MediaVest. Starcom has committed to spend up to $20 million of its clients' budgets on addressable ads sold through DirecTV next year.

Forget the fact that Canoe Ventures, the much-hyped addressable ad platform launched by the big cable companies, is … well, dead in the water. A satellite provider may wind up delivering the most precisely-targeted TV ads for brands like P&G and Coke next year.

Why now? Why DirecTV?

As is often the case with adoption of a new ad platform, big brand advertisers (those with the deepest pockets) want efficiency, effectiveness and scale before they commit. Starcom CEO Laura Desmond told the WSJ that DirecTV can deliver all three:

"We are finally at the tipping point … Advertisers' biggest complaint so far has been that many tests of this service haven't been big enough in terms of scale."

The DirecTV service, she added, is "national and scalable." In total, DirectTV has about 19.1 million subscribers.

As for the effectiveness, Starcom tested addressable ads with Comcast, a cable provider, in 2009. The trial reached 60,000 households in Baltimore, MD. On average, homes that received targeted TV ads changed the channel (during commercial pods) 32% less than homes that were served regular ads.

How it will work

It’s a three-step process with DirecTV:

The advertiser or media agency chooses its target household (i.e. homes with children under age five, single male pet owners, etc.)

DirecTV pulls in third-party data from companies like Experian and others, that can help segment its subscriber base (i.e. visitor logs from a family entertainment chain like Chuck E. Cheese, or supermarket loyalty program data that shows dog food purchases)

Targeting data is loaded onto the desired household’s set-top box. Then, when the time slot is ready, the box determines the most appropriate ad from a preloaded set of commercials

What's the biggest roadblock?

It’s called privacy, with a capital "P." DirecTV says it won't use household viewing data for targeting purposes, but creating a profile that blends on- and offline consumer data could be even more of a concern for viewers (and privacy advocates).

For example, supermarket data feels especially intrusive. (While I welcome coupons for the products I regularly buy, there's still a weird sensation when they pop out of the automated machine a few days after I've made a specific purchase). Imagine how strange a newlywed couple might feel, if they start seeing TV ads for baby supplies the day after they purchase a pregnancy test.

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